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Answer:
Consider the following analysis.
Explanation:
A capital budgeting decision for Southwest airline should consider the following aspects: -
Assessment of the cash flows gained on investment into the Cuba market adjusted for time value of money. This evaluation of profitability, assessment of demand in Cuba, assessment of investment per traffic unit in Cuba forms an integral part of the investment decision. Major methods to evaluate profitability are NPV (Net Present Value) and IRR (Internal rate of Return). The NPV method calculates the difference in the initial investment and present value of cash flows over the period of the project. IRR method considers the discount rate at which NPV of project cash flows is zero. A project with positive NPV and higher IRR is considered.
The proposed investment should ensure that the interests of all stakeholders are safeguarded i.e Creation of Value proposition for shareholders as well as ensuring timely repayments to existing lenders of the project
.
Raising of capital for the Cuba project considering the company’s existing policies on debt and equity and cost benefit analysis. An equity funding would be costlier alternative than debt funding. However, a debt funding may increase the risk of lowered post tax profits and decreased returns to the shareholders, while an equity funding would allow the company an option in deferring the distribution of the profits or part-distribution of profits to the shareholder by deciding on the dividend payout ratio.
Management of aircrafts and other major assets of the company – The company should ensure that the existing aircrafts are effectively utilized for providing the airline services in Cuba. Acquisition of additional aircrafts along with other assets (warehousing facility for repairs etc.) should also be taken into consideration.
An adequate working capital management ensuring smooth day to day operations should be undertaken. This includes management and allocation of funds for day to day operations like fuel expenses, airport operating charges, repair and maintenance of aircrafts etc.
Answer:
The clients may initiate a civil lawsuit to recover their losses
Explanation:
It is assumed that the agent sold the securities with an intention to defraud. Under the Uniform Securities Act, the client may initiate a civil lawsuit so as to recover losses. Clients would sue based on the fact that the securities were unregistered and non-exempt while attempting to get back what they have lost in finance, attorney fees, and interest inclusive. These 3 damages are only applicable to insider trading.
Answer:
15.29%
Explanation:
r = Interest rate = 14.75%
m = Number of times compounding in a year = 2
Effective Annual Rate = (1 + r/m)^m - 1
Effective Annual Rate = (1 + 0.1475/2)^2 - 1
Effective Annual Rate = 1.07375^2 - 1
Effective Annual Rate = 1.1529390625 - 1
Effective Annual Rate = 0.1529391
Effective Annual Rate = 15.29%
So, the effective annual interest rate of the investment is 15.29%